NATURAL JUICE CO. v. ORCHID ISLAND JUICE CO.

May 4, 2004.

NATURAL JUICE CO., Plaintiff,
v.
ORCHID ISLAND JUICE CO., Defendant

The opinion of the court was delivered by: HARRY LEINENWEBER, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Natural Juice Company (hereinafter, "Natural") brought this
action against defendant Orchid Island Juice Company (hereinafter,
"Orchid") seeking damages for breach of contract (Count I) and a
declaratory judgment (Count II) of its contractual rights. Pending before
the Court is Orchid's Motion to Dismiss Pursuant to Federal Rule of Civil
Procedure 12(b)(6), for failure to state a claim upon which relief may be
granted.

I. BACKGROUND

Natural is an Illinois corporation engaged in the business of selling
and distributing fresh squeezed fruit and vegetable juice products.
Natural has filed a two-count complaint against Orchid, one of its juice
suppliers, alleging that Orchid has breached its obligations under an
Amended and Restated Exclusive Supply and Independent Distributor Master
Agreement (the "Revised Agreement").

According to Natural's Amended Complaint, prior to entering the Revised
Agreement, Natural was party to an exclusive distributorship agreement
(the "Original Agreement") with the Fresh Juice Company (hereinafter, "FJC"). FJC was subsequently bought by
a company called Saratoga Beverage Group, which was then bought by a
company called North Castle Partners (hereinafter, "North Castle"). A
few months later, North Castle purchased Orchid and consolidated the
manufacturing and packaging operations of FJC, Saratoga, Orchid, and
North Castle.

Shortly thereafter a dispute arose regarding the performance of North
Castle and its affiliated companies under the Original Agreement. Natural
subsequently filed suit in January 2001 against North Castle, Saratoga,
FJC, and Orchid for breach of the Original Agreement. Within about a
month of filing suit, however, Natural entered into the Revised Agreement
with FJC; Orchid; California Day-Fresh Foods, Inc.; Fantasia Fresh Juice
Company; and M. H. Zeigler and Sons, Inc. (each individually a
"party-company" or collectively the "party-companies"). According to
Natural, the parties settled the litigation and Natural dismissed its
claims in return for the party-companies' entering into the Revised
Agreement.

The Revised Agreement provided that the party-companies would use
commercially reasonable efforts to supply Natural with juice products for
Natural to distribute exclusively within the territory covered by the
agreement. Moreover, the party-companies were to supply products from a
party-company maintaining a Florida-based production facility when
commercially feasible. According to Natural, the only party-company with a Florida-based production
facility was and is Orchid.

The agreement did not obligate Natural to buy any minimum quantity of
juice from the party-companies. However, the agreement required Natural
to use commercially reasonable efforts to increase its sales. In
addition, the agreement provided that if Natural failed to purchase at
least 20,000 gallons of juice in any given month, the party-companies
could terminate the Revised Agreement without penalty.

Under the Revised Agreement, Natural paid for its requirements on "cost
plus $1.30" basis. In other words, for every gallon of juice supplied,
Natural paid the supplier $1.30 plus the cost of the fruit, packaging,
labeling, and pasteurization.

The Revised Agreement also permitted the "Companies" (i.e., the
party-companies) to terminate the agreement "without cause." To exercise
this provision, the party-companies would have to provide Natural with 60
days written notice, and pay a contractually-specified termination fee.
The Revised Agreement initially set this fee at $2.5 million, with the
fee declining by roughly $21,000 per month between March 1, 2004 and
February 28, 2011, when the fee would reach zero. The parties disagree as
to whether the agreement required payment of a termination fee for
any without cause termination, or only for without cause
terminations that met the contractually-specified conditions (i.e., 60
days written notice, apparent breach by all the party-companies
collectively).

On October 31, 2003, following a dispute with Orchid concerning alleged
overcharges, Natural demanded assurances from Orchid that it would
continue to perform under the Revised Agreement. Orchid responded in a
November 4, 2003 letter, stating that it "intends to perform pursuant to
the Agreement," and that one its employees "is calling [Natural] to
schedule a pricing conference." Representatives of both parties attended
such a meeting on November 12, 2003. At this meeting, Natural claims that
Orchid stated that it neither would pay the overcharge credits requested
by Natural, nor continue to sell products to Natural at the price
specified in the Revised Agreement. In addition, Natural claims that
Orchid threatened that if Natural did not renegotiate its pricing, Orchid
would supply product from third-party vendors. These alleged statements
and threats by Orchid form the basis of Natural's suit.

&nbsp; The Court views all the facts alleged in the complaint, as well as any
reasonable inferences drawn from those facts, in the light most favorable
to Plaintiff. Stachon v. United Consumers Club, Inc.,
229 F.3d 673, 675 (7th Cir. 2000). Dismissal is appropriate only where
it appears beyond doubt that under no set of facts would Plaintiff's
allegations entitle him to relief. Henderson v. Sheahan,
196 F.3d 839, 846 (7th Cir. 1999); Kennedy v. National Juvenile
Del. Ass'n, 187 F.3d 690, 695 (7th Cir. 1999). The complaint,
however, must allege that each element of a cause of action exists in
order to withstand a motion to dismiss. Lucien v. Preiner,
967 F.2d 1166, 1168 (7th Cir. 1992). Furthermore, Plaintiff
"cannot satisfy federal pleading requirements merely by attaching ...

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